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FOREX Tech Targets

We shifted to a neutral stance on Tuesday (21 Aug, spot at 1.1485) and held the view the ‘robust’ recovery in EUR could lead to a test of the major 1.1630 resistance. We added, it could “take several days before this level would come into the picture”. However, the pace of the anticipated rebound was faster than expected as EUR hit a high of 1.1623 yesterday (22 Aug) before closing higher for the sixth consecutive days. The rapid recovery is running too fast, too soon but we still see chance for a ‘full-test’ of 1.1630 before a significant pull-back can be expected. The next resistance above 1.1630 is at 1.1670 and at this stage, we apportion a low probability for a clear break above this level. On the downside, the ‘key support’ is currently at 1.1470 (was previously at 1.1420) and only a break of this level would indicate that the current upward pressure has eased.

We shifted from a bearish to neutral stance on Tuesday (21 Aug, spot at 1.2795) and were of the view that GBP has found a bottom at 1.2662 last week. While we view the price action from the low as the early stages of a consolidation phase, we noted that “shorter-term indicators are on the positive side” and the immediate bias is for GBP to “probe the top of the expected 1.2700/1.2960 consolidation phase”. GBP subsequently hit a high of 1.2936 yesterday (22 Aug) and from here, we continue to see chance for the 1.2960 level to be ‘tested’. At this stage, the odds for a sustained break above this level are not high. Overall, we expect GBP to stay underpinned (at least for another 1 to 2 more days) and only a break of 1.2800 would indicate the current upward pressure has eased.

AUD/USD: Neutral (since 21 Aug 18, spot at 0.7335): AUD has moved into a consolidation phase.

We turned neutral on AUD two days ago (21 Aug, spot at 0.7335) and there is no change to the outlook. AUD subsequently hit a high of 0.7382 during NY hours on Tuesday before easing off quickly. We continue to view the current price action as the early stages of a 0.7270/0.7420 consolidation phase. Shorter-term indicators have weakened somewhat but at this stage, we continue to expect AUD to consolidate and trade sideways.

NZD moved above the top of our expected 0.6560/0.6690 consolidation range yesterday (22 Aug) and as it hit a high of 0.6722. Despite the relatively strong up-move over the past few days, we are not convinced that the current strength in NZD is sustainable. The move to 0.6722 is more likely an ‘expansion in range’ and while further NZD strength to 0.6760 is not ruled out, any up-move is viewed as part of a 0.6610/0.6760 consolidation range. In other words, NZD has likely moved into a higher trading range.

USD/JPY: Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation range.

In our last update on Tuesday (21 Aug, spot at 110.05), we held the view that USD has scope to test the major 109.35 support. USD subsequently dropped to a low of 109.76 during NY hours on Tuesday before staging a surprisingly strong rebound. Downward pressure has eased with the recovery and USD has likely moved back into a consolidate range. From here, we expect USD to trade sideways, likely between 109.90 and 111.45.

We shifted to a neutral stance on Tuesday (21 Aug, spot at 1.1485) and held the view the ‘robust’ recovery in EUR could lead to a test of the major 1.1630 resistance. We added, it could “take several days before this level would come into the picture”. However, the pace of the anticipated rebound was faster than expected as EUR hit a high of 1.1623 yesterday (22 Aug) before closing higher for the sixth consecutive days. The rapid recovery is running too fast, too soon but we still see chance for a ‘full-test’ of 1.1630 before a significant pull-back can be expected. The next resistance above 1.1630 is at 1.1670 and at this stage, we apportion a low probability for a clear break above this level. On the downside, the ‘key support’ is currently at 1.1470 (was previously at 1.1420) and only a break of this level would indicate that the current upward pressure has eased.

We shifted from a bearish to neutral stance on Tuesday (21 Aug, spot at 1.2795) and were of the view that GBP has found a bottom at 1.2662 last week. While we view the price action from the low as the early stages of a consolidation phase, we noted that “shorter-term indicators are on the positive side” and the immediate bias is for GBP to “probe the top of the expected 1.2700/1.2960 consolidation phase”. GBP subsequently hit a high of 1.2936 yesterday (22 Aug) and from here, we continue to see chance for the 1.2960 level to be ‘tested’. At this stage, the odds for a sustained break above this level are not high. Overall, we expect GBP to stay underpinned (at least for another 1 to 2 more days) and only a break of 1.2800 would indicate the current upward pressure has eased.

AUD/USD: Neutral (since 21 Aug 18, spot at 0.7335): AUD has moved into a consolidation phase.

We turned neutral on AUD two days ago (21 Aug, spot at 0.7335) and there is no change to the outlook. AUD subsequently hit a high of 0.7382 during NY hours on Tuesday before easing off quickly. We continue to view the current price action as the early stages of a 0.7270/0.7420 consolidation phase. Shorter-term indicators have weakened somewhat but at this stage, we continue to expect AUD to consolidate and trade sideways.

NZD moved above the top of our expected 0.6560/0.6690 consolidation range yesterday (22 Aug) and as it hit a high of 0.6722. Despite the relatively strong up-move over the past few days, we are not convinced that the current strength in NZD is sustainable. The move to 0.6722 is more likely an ‘expansion in range’ and while further NZD strength to 0.6760 is not ruled out, any up-move is viewed as part of a 0.6610/0.6760 consolidation range. In other words, NZD has likely moved into a higher trading range.

USD/JPY: Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation range.

In our last update on Tuesday (21 Aug, spot at 110.05), we held the view that USD has scope to test the major 109.35 support. USD subsequently dropped to a low of 109.76 during NY hours on Tuesday before staging a surprisingly strong rebound. Downward pressure has eased with the recovery and USD has likely moved back into a consolidate range. From here, we expect USD to trade sideways, likely between 109.90 and 111.45.

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